to pay much more, probably not less on the average than twenty-five
per cent. more, for everything they require in the conduct of their
business, including labor, than they did ten years ago, (second) that
those who make use of railway services receive much more, probably
not less on the average than twenty-five per cent. more, for their
labor or for the commodities which they produce than they did ten
years ago, (third) that average rates per ton per mile for railway
freight transportation, expressed in money, that is to say, in
dollars and decimal fractions of dollars, are now somewhat lower than
they were in 1897 or formerly, and (fourth) that the ton-mile unit
is a highly stable one as to quality and that in consequence of this
stability the ton-mile rates accurately answer the question whether
rates, expressed in money, have remained stationary, have advanced
or have declined. The latter conclusion has been supplemented and
re-enforced by data from the classifications and rate schedules
which tend strongly to prove the same fact. Therefore, it has been
made plainly apparent that there has been a decline in money rates
since 1897. But railways require money only to remunerate the
highly skilled labor they employ, to purchase necessary materials
and supplies, to pay taxes and to compensate the capital they
use. Consequently money is worth to the railway corporation, as
to the wage-earner, only what it will buy for the satisfaction of
wants. A dollar which will pay for less labor or buy less fuel for
locomotives is worth less to the railway just as a dollar that will
buy less bread or clothing is worth less to the man who works for
wages or receives it as interest on his savings. It has long been
realized that any effort to study the question of wages, throughout
an extended period, which fails to take into consideration the
purchasing power of the money received is worse than valueless,
because it is deceptive and misleading. It has been generally
recognized also that any effort to consider the condition of
particular classes of producers by comparisons of the prices obtained
for their products at different periods, as that of farmers by the
prices of corn and wheat, is similarly dangerous unless these prices
are turned into quantities of the commodities which such producers
must purchase.
[In elucidating this obvious point Mr. McCain cites such authorities
as Adam Smith, John Stuart Mill, President Hadley of Yale, Professor
Frank W. Taussig of Harvard, and then continues.]
A rapid decrease in the purchasing power of the money they receive
has brought about, within a single decade, a reduction in railway
freight rates that cannot be less than twenty-five per cent. This
reduction began almost imperceptibly at a time when American
railway rates were already lower than ever before in the history
of railways and lower than anywhere else in the world. It has
proceeded, concurrently with the fall in the real value (that is in
the purchasing power) of the American dollar, but in such subtle
form that only when its consequences threaten the stability of the
American railway system, the wages of railway employes and the
prosperity of the great rail-manufacturing, car-building and other
allied industries is its real significance and extent perceived
even by those most immediately interested. That such a threat now
hangs over the railway industry of America and every employe and
industry dependent upon it is too plain for argument. The situation
is acute and nothing but a prompt adjustment of the rates obtained
for the services rendered to offset, partially, at least, the loss
in the value of the money received will prevent disaster. That such
an adjustment, if effected now, will, at best, be tardy and belated
is evident from the facts herein presented, which show that prices
in every other industry and the wages of all artisans were long ago
adjusted to this fundamental condition.
APPENDIX B
Statement showing prices of railway supplies purchased in 1897 and
1907 as disclosed by the records of various Eastern railways. It
should be noted that the quality of the supplies, made the basis of
this statement, may have changed somewhat between 1897 and 1907, but
in few instances would the allowance for this source of variation
materially affect the results.
Prices.
Increase.
Class. 1897. 1907. Per cent.
Locomotives--
Mogul $10,181.00 $14,111.00 38.6
10-Wheel passenger 11,026.00 15,734.00 42.7
Atlantic not built 16,236.00 --
Pacific not built 19,580.00 --
Prairie not built 16,468.00 --
8-Wheel passenger 10,243.00 13,581.00 32.5
6-Wheel switcher 9,392.00 12,098.00 28.8
Cars (1899-1907)--
Hopper 475.00 1,185.00 --
Box 783.00 1,110.00 --
490.00 844.00 --
519.00 897.00 --
Note.--The prices of cars shown above are typical prices paid
by different roads in the respective years and employed in the
same service. As the cars purchased in 1907 are of more modern
construction, better quality and larger capacity than those
purchased in 1899, no accurate comparison can be made or percentage
of increased cost shown.
(1902-1907)--
100,000 lbs. Capacity Box Car
with Steel Underframe and
wood superstructure $1,043.49 $1,148.88 10.09
100,000 lbs. Capacity Composite
Gondola Car with Steel Under-
frame and wood superstructure 1,021.62 1,148.45 12.42
100,000 lbs. Capacity Composite
Flat Car with Steel Underframe
and wood floor 953.23 1,010.60 6.02
100,000 lbs. Capacity, all steel
Hopper Cars 1,002.22 1,076.05 7.47
Angle Bars Cwt. 1.02 1.55 52.0
Axles--
Locomotive Cwt. 2.75 2.95 7.2
Cwt. 2.72 2.85 4.7
Tender Cwt. 1.40 2.35 67.8
Car Cwt. 1.60 1.95 21.9
Cwt. 1.45 2.20 51.7
Cwt. 1.68 2.25 34.0
Bar Iron Cwt. 1.19 1.78 49.5
Cwt. 1.10 1.80 63.6
Cwt. 1.05 1.50 42.8
Brick--
Common M 4.50 6.00 33.3
Paving M 8.00 11.00 37.5
Castings--
Brass Lb. 0.11 0.25 127.3
Brass Lb. 0.12 0.25¾ 114.6
Steel Cwt. 3.50 6.00 71.4
M. Iron Cwt. 2.50 4.25 70.0
Cwt. 2.70 3.60 33.3
Cwt. 2.35 2.85 21.2
Gray Cwt. 1.15 2.00 74.0
Cwt. 1.20 1.65 37.5
Coal Ton 1.46 1.76 20.5
Ton 1.32 1.82 38.0
Ton 1.17 1.52 29.8
Ton 1.83 2.07 13.1
Run of Mine Ton .65 1.05 61.5
¾ Ton .75 1.15 53.3
Couplers--
Freight Set 14.00 15.00 7.1
Passenger Set 20.50 27.00 31.7
Tender Set 18.00 18.50 2.8
Fencing M. Ft. 12.00 25.00 108.3
M. Ft. 10.00 18.15 81.5
Flues Ft. 0.13 0.15½ 19.2
Ft. 0.14 0.15 7.1
Forgings--
Axles Lb. 0.02 0.03 50.0
Crank Pins Lb. 0.05 0.10 100.0
Piston Rods Lb. 0.06 0.10 66.6
Main Rods Lb. 0.08 0.10 25.0
Side Rods Lb. 0.08 0.10 25.0
Lead--
White Cwt. 4.95 6.25 26.3
Lumber--
Large Bridge Timbers M. Ft. 13.12 25.62 95.3
M. Ft. 23.00 38.00 65.2
M. Ft. 20.00 33.00 65.0
M. Ft. 17.00 28.00 64.7
M. Ft. 22.50 38.00 68.9
M. Ft. 15.00 27.00 80.0
Car Sidings M. Ft. 17.00 35.00 105.9
M. Ft. 18.00 33.00 83.3
Stringers M. Ft. 18.00 28.00 55.5
M. Ft. 16.00 34.00 112.5
M. Ft. 18.00 26.00 44.4
M. Ft. 17.00 28.00 64.7
Car Flooring M. Ft. 17.00 24.00 41.2
M. Ft. 20.00 33.00 65.0
M. Ft. 11.00 25.00 127.2
M. Ft. 14.00 19.71 40.8
Piles (Soft) Ft. 0.08 0.14 75.0
Ft. 0.08 0.11 37.5
(Hard) Ft. 0.12 0.17 41.7
Heavy Planks M. Ft. 14.00 22.00 57.1
M. Ft. 14.00 30.00 114.3
M. Ft. 16.00 27.00 68.8
Cross Ties (Hardwood) Each 0.47 0.80 70.2
Each 0.60 0.85 41.7
Each 0.55 0.75 36.4
Each 0.37 0.70 89.2
Each 0.45 0.60 33.3
Each 0.45 0.55 22.2
Each 0.48 0.90 87.5
Each 0.38 0.80 110.5
Each 0.38 0.67 76.4
Softwood Each 0.22 0.60 172.7
Each 0.20 0.28 40.0
Each 0.23 0.48 108.7
Each 0.48 0.58 20.8
Nails Cwt. 1.60 2.20 37.5
Cwt. 1.33 2.16 62.4
Cwt. 1.10 2.15 104.5
Wire Cwt. 1.27 1.85 45.7
Cwt. 1.48 2.11 42.6
Oil--
Kerosene Gal. 0.06 0.09½ 58.3
Signal Gal. 0.28 0.36 28.6
Gal. 0.20 0.36 80.0
300 degree Gal. 0.09 0.10 11.1
Paint--
Gal. 0.77 1.03 33.8
Gal. 0.50 0.65 30.0
Cwt. 4.75 6.62 39.4
Cwt. 5.50 6.50 18.2
Pipe--
Cast Iron Ton 16.00 34.00 112.5
Ton 16.75 29.15 74.0
Ton 13.50 21.00 55.6
Ton 16.00 32.00 100.0
Copper Lb. 0.31 0.34 9.7
Lb. 0.30 0.33 10.0
Lb. 0.30 0.35 16.7
Rails--
Steel Gross Ton 19.00 28.00 47.4
Gross Ton 18.00 28.00 55.6
Gross Ton 18.05 26.60 47.4
Rubber Hose--
1 Inch Ft. 0.34 0.41 20.6
1¼ inch Ft. 0.40 0.46 15.0
Springs--
Loco. Cwt. 4.05 4.10 1.2
Switches--
Comp. 80 31.90 40.77 27.8
Frogs 80 18.75 27.50 46.7
Switch Lamps Doz. 45.00 65.00 44.4
Tile Rod 0.40 0.60 50.0
Track Bolts Cwt. 1.70 2.45 44.1
Cwt. 1.65 2.60 57.6
Cwt. 2.20 2.75 25.0
Cwt. 1.65 2.45 48.5
Cwt. 1.75 2.76 57.7
Track Spikes Cwt. 1.85 2.52 36.2
Cwt. 1.35 1.70 25.9
Cwt. 1.50 2.60 73.3
Cwt. 1.65 2.25 36.4
Cwt. 1.50 1.90 26.7
Cwt. 1.45 1.90 31.0
Cwt. 1.75 2.00 14.3
Track Tools--
Axes Doz. 8.00 9.00 12.5
Drills Each 0.35 0.46 31.4
Ratchets Doz. 5.13 6.65 29.6
Shovels Doz. 5.00 5.65 13.0
Lamp Bars Each 0.52 0.65 25.0
Waste--
Colored Lb. 0.047 0.055 17.0
White Lb. 0.06 0.08 33.3
Wheels--
Car Each 5.60 7.80 39.29
Each 6.00 8.35 39.17
Each 7.50 9.30 24.0
Each 4.78 8.46 76.9
Each 4.50 9.00 100.0
Each 6.75 8.00 18.5
Each 6.50 9.00 38.5
Each 6.00 9.05 50.8
33-in Steel Each 50.00 56.00 12.0
Each 42.50 44.50 4.7
36-in. Steel Each 42.50 50.50 18.8
Each 54.00 60.00 11.1
Wire--
Barbed Cwt. 1.70 2.50 47.0
Iron Cwt. 1.50 2.20 46.7
Copper Lb. .13 .26 100.0
Lb. .13 .18 38.5
FOOTNOTES:
[E] A partial list of the articles in each class in 1807 which are
still in the same class, as shown by Official Classifications Nos. 16
and 32, is given in Appendix A to Mr. McCain's pamphlet. There were
approximately 3,000 various articles bearing the same classification
or rating in 1908 as in 1898.
[F] Appendix C occupies pages 89 to 95 of Mr. McCain's pamphlet.
[G] Appendix D occupies pages 96 to 101 of McCain's pamphlet.
[H] Details from which the table was derived are given in Appendix E
to Mr. McCain's pamphlet, pp. 102-106.
THE RAILROADS AND PUBLIC APPROVAL
BY EDWARD P. RIPLEY,
President Atchison, Topeka and Santa Fe Railway Company.
Address delivered at the annual dinner of the Railway Business
Association, New York, November 10, 1909.
Circumstances over which I had no control caused me to be born with a
distinct inability to think consecutively, or talk coherently, in a
standing position and before an audience.
Seated on the small of my back with my feet on the desk I sometimes
think I am thinking, but when I get before an audience I am like
the little steamer plying on the Sangamon River that had a 10-foot
boiler and a 12-foot whistle--when she whistled she stopped. But
my weakness, or rather one of my weaknesses, is susceptibility to
flattery, and when one of your officers represented in honeyed
phrase the importance of your organization and of this meeting, and
laid particular stress upon the importance of my saying something,
I weakly yielded. I know the result will be disappointment, but the
responsibility is only partly mine, and you know we railroad men get
so little flattery that when properly administered the result is
intoxicating.
Also, let me state in extenuation of the crime I am about to commit
that the subject was not my own selection, but was chosen for me.
My natural disposition in discussing railroads and the public is
to growl, while, if I understand your officers' wishes, I am here
expected to "purr."
But while a better man might have been selected to say it, there is
much to be said as to the railroads and public opinion.
In this country the people rule--and in the long run that system,
that method or that personality that does not meet the approbation of
the public can not succeed. True, the public is often fooled; true,
it "gets on the wrong feet," as often perhaps as on the right; true,
it has to be guided, controlled, and at times abruptly stopped by
those authorities which it has selected for that purpose; yet the
fact remains that the government of the people, that Congress, the
legislatures and even the courts are keenly alive to public sentiment
and anxious not to stray far from the line of public opinion.
Our forefathers recognized the danger that the majority would not
necessarily be right, but might often be wrong, and sought to provide
safeguards for the rights of the minority. But these safeguards are
obviously growing less efficient; obviously growing weaker; obviously
more sensitive to the public clamor which for the moment stands for
public opinion, and when all safeguards have been exhausted it is to
public opinion that we must look at last.
There are two things about which the public is most critical--one
is the management of the newspaper, the other the management of the
railroad. In his heart the average citizen believes that he could
operate either his daily newspaper or the railroad passing through
his town much better than it is being operated; he would perhaps
hesitate to announce this opinion, but his attitude is coldly
critical, and it is to be remembered that the railroad is all out
of doors--all out in the weather, everything about it exposed to
the limelight and visible to anybody's naked eye. There is no human
activity the operation of which is attended with so much publicity.
All our earnings and expenses are published; all our charges and all
our methods the subject of regulation, intelligent or otherwise.
Many years ago Mr. W. K. Vanderbilt, journeying to Chicago, was met
on the outskirts of the city by an enterprising reporter for a daily
paper, who boarded the train and forced himself into the presence
of Mr. Vanderbilt and his party, and demanded news on behalf of
"the public." Probably Mr. Vanderbilt, resenting the intrusion,
said something uncomplimentary to the reporter and possibly to the
"public" he claimed to represent, and the next issue of that paper
quoted him in scare headlines as using the phrase, "The public be
damned." Mr. Vanderbilt subsequently denied having said it, but
whether he did or not and whatever may have been his provocation,
the phrase has for nearly forty years been used as indicative of the
railway man's attitude toward his patrons.
Many years ago also the late George B. Blanchard, being on the
witness stand at Albany, was asked what was the correct basis for
making freight rates, and replied, "What the traffic will bear"--a
most excellent answer, but a most unfortunate one--for it has passed
into history as meaning "all the traffic will bear," which is a very
different thing.
Such things as these, distorted as they have been, conspired to
inflame public opinion, but that is not all.
It is the custom and privilege of men past middle age to be
reminiscent and I ask your indulgence for a very brief history of
the events that have led us to our present status. My railroad
experience began about forty years ago and the railroad business was
then much like any other business--it had its price list as did the
merchant; but, like the merchant, it had its discounts for large
shippers and for special conditions, and the discounts were irregular
and various. The larger shippers demanded concessions as a right,
and the principle was generally admitted. Naturally the result was
favoritism, not because the railroads desired especially to favor one
as against another, but because in the nature of things secret rates
could not well be given to everybody.
Nobody regarded these secret rates as criminal or objectionable. But
as time passed and these discriminations became more frequent and
greater there arose a demand from the less favored portion of the
shipping community for legislation forbidding the discrimination and
providing for like opportunity for all. This was strenuously opposed
by the favored shippers and by those railroad men who believed the
railroad to be purely a private institution and not amenable to law
as to its charges. It was common enough to hear it seriously argued
that the larger shipper was entitled to the lower rate--this view
was held by many shippers and, I believe, by most railroad managers.
They argued that the business was like any other business--that each
interest must look out for itself, and that competition between the
roads would prevent rates from ever being too high.
For myself I may say that I realized from an early period that
discrimination as to rates was unjust and at no time objected to laws
forbidding it.
The interstate commerce law was passed in 1887. It was crude in its
provisions and was the result of compromises between radicals and
conservatives; it sought both to foster competition and to abolish
it, and in that respect remains still contradictory and impossible.
Upon the passage of the law, that which had been looked upon as
perfectly proper and as the working of natural competitive forces
became illegal and criminal. The railroads generally accepted
the law and made an honest effort to observe it--the mercantile
community did not--indeed, they openly defied it, soliciting rebates
unblushingly and threatening with the loss of their tonnage those
roads who would not succumb. The Interstate Commission, new to its
duties, contented itself with comparatively unimportant decisions and
practically did nothing to help those railroads who desired honestly
to carry out the provisions of the law; and, as a result, within a
year of the passage of the law it was quite generally disregarded.
A few railroad men were fined, a few shippers convicted--and almost
immediately pardoned--and the law fell into disrepute, a condition
disgraceful alike to the government, the shippers and the railroads
and especially distasteful to the latter, but exactly what was to be
expected.
The result was the passage of the so-called Elkins bill, and later
the Hepburn bill, which, while amateurish and in many ways vicious,
have effectually stopped the rebate system--a result for which we may
all be thankful.
In all the controversies that have led up to this almost complete
control of railroad earnings and railroad policies by governmental
agencies, the railroads have, as a rule, acted in active opposition.
They have not been unanimous--some of us were willing to accept it
long before it became a fact, but the majority could see nothing in
it but disaster--it is too early to say which was right--perhaps
an earlier acceptance of control would have made the control more
lenient; perhaps its earlier acceptance would, on the other hand,
have bound the chains more tightly. But the fact remains that while
the basic principle of absolute equality as to rates has been
accepted by the railroads gladly and in all good faith, and they
have also accepted the principle of government regulation, the scars
of the conflict remain and a large section of the public still
suspects and misjudges us. It is true, of course, that in the rapid
development of our business and in the exigencies of a most exacting
profession there have been abuses and lapses, but I am here to
maintain that the standards of fair dealing and commercial honesty in
our business have been as high as in any other, and I appeal to you
who sit around this table to say if it be not so.
But whatever sins may be laid at our door, however much we may have
once believed that ours was a private business to be controlled
exclusively by its owners, however much we have resented or still
resent the interference of the public as manifested in the various
governing bodies, it is, after all, the public that is master and
we must all recognize it. It is, however, still our privilege to
exercise our right as citizens and members of the body politic to
use our efforts to guide it. Acknowledging as we must that the public
is all-powerful, the question is, How may we satisfy our masters and
thus mitigate our woes and preserve our properties?
First. We must realize, as I think we all do (after a series of very
hard knocks), that the railroads are not strictly private property,
but subject to regulation by the public through its regularly
constituted authorities--that the Government may reduce our earnings
and increase our expenses has been sufficiently proved.
Second. To meet this situation we must endeavor to get in touch with
public opinion. Perhaps you will smile when I say that for years I
have read every article on railroad matters in each of the papers
published along our ten thousand miles of road--not an easy task for
a busy man--but while I have waded through much chaff I am sure it
has resulted in some reforms.
Third. The avoidance of action seriously counter to public opinion,
except for compelling reasons.
Fourth. The disposition to explain these reasons through officers and
employes of all grades. Generally, the loudest criticisms come from
those who are not anxious to know the truth.
Fifth. Efforts to improve service in many cases without hope of
reward and for the deliberate purpose of winning public approval,
such as better stations, improved heating and lighting devices,
better equipment, better terminal facilities, separation of grades,
etc.--all with due regard to the rights of those whose money we are
spending.
As we do all these things, meet us half way. Encourage the habit
of not rushing into abuse. Try to consider the facts and the
difficulties--this is for the public interest as well as ours. Oppose
unnecessary and restrictive legislation and give us a chance.
Most of our railroads are mere imitations of what a railroad should
be, and what it must be to keep abreast of the country--yet even the
poorest serves a useful purpose and can not be spared. An eminent
authority has said that five thousand millions of dollars would be
required to supply the transportation needs of the next decade, and
I do not believe it is an over-estimate. Can private capital be
found to that amount unless "public sentiment" is willing to assure
it of return? A portion of the public is clamoring for facilities
involving great additions to expenses; another portion for limitation
of earnings; will the investor consent to accept the risks while
strictly limited as to his return? Since the public may do as it will
with us and since we are necessary to the public, we may properly
call attention to the fact that railway investments already pay less
than any other line, and to ask what is to be done--really, it is
quite as much the public's affair as ours.
Is it certain that the mixture of private ownership and public
regulation which is now prevalent will succeed? Is it not contrary to
all rules of political economy and to all the teachings of history?
Starting as a purely private industry it has been appropriated in
part and other parts are apparently to follow. Granting whatever
may be claimed for the advantages of regulation by government, do
not equity and ordinary commercial decency require that such close
restriction and supervision should be accompanied by some guaranty of
return?
I have endeavored to sketch briefly what should be the attitude of
the railway man _as_ a railway man toward the public. I am sure I
voice the sentiment of all managing railroad officers when I say
that our great desire is to please the public and to give it the
best possible service for the least possible compensation consistent
with reason. Discriminations have long since passed away and nobody
is better pleased than the railroad man that it is so. There is no
desire to escape either responsibility or regulation. We desire to
accord only justice and we ask in return only justice. May I now,
as a citizen, appeal to the railway employe, to the members of this
Association, and to all other good citizens, to resist to the utmost
of their powers the encroachment of government on private rights?
Mr. Elbert Hubbard, of East Aurora, N. Y., recently remarked that
"when God sent a current of common sense through the universe most of
the reformers wore rubber boots and stood on glass." Our troubles are
with this class--well-meaning men who have zeal without knowledge and
enthusiasm without sanity; these we may not reach, but the great mass
of the solid and substantial citizenship may perhaps be induced to
stop and consider whither we are drifting and whether this greatest
of all the country's industries is being fairly treated.
RAILROADS AND THE PUBLIC
BY HON. JOHN C. SPOONER.
From the address delivered at the annual dinner of the Railway
Business Association, New York, November 10, 1909.